On SynthX Lab, liquidity for synthetic assets is generated through staking and swapping. Staking plays a crucial role in the system by locking collateral and maintaining a target collateralization ratio (C-Ratio), which supports the protocol's products.

When users stake XDC or PLI to mint xdUSD, they take on a debt that corresponds to the amount of xdUSD minted. This debt reflects the total debt of the protocol and must be repaid (by burning xdUSD) before the staked tokens can be withdrawn. The staker's debt increases or decreases based on the supply of synthetic assets and their exchange rates.

For example, if 50% of the Synths represent synthetic ether (xdETH) and the price of ether doubles, the total protocol debt—and thus the staker's debt—would increase proportionally by 50%. Unlike traditional DeFi protocols, SynthX Lab rewards users for contributing collateral, providing deep liquidity to the system.